When buying or selling real estate, you may find it helpful
to have a real estate agent assist you. Real estate agents
can provide many useful services and work with you in
different ways. In some real estate transactions, the
agents work for the seller. In others, the seller and
buyer may each have agents. And sometimes the same agents
work for both the buyer and the seller. It is important
for you to know whether an agent is working for you as
your agent or simply working with you while acting as
an agent of the other party.
This article addresses the various types of working relationships
that may be available to you. It should help you decide
which relationship you want to have with a real estate
agent. It will also give you useful information about
the various services real estate agents can provide buyers
and sellers, and it will help explain how real estate
agents are paid.
SELLERS
If you are selling real estate, you may want to "list"
your property for sale with a real estate firm. If so,
you will sign a "listing agreement" authorizing the firm
and its agents to represent you in your dealings with
buyers as your seller's agent. You may also be asked to
allow agents from other firms to help find a buyer for
your property.
Be sure to read and understand the listing agreement
before you sign it.
The listing firm and its agents must
- promote your best interests
- be loyal to you
- follow your lawful instructions
- provide you with all material facts that could influence
your decisions
- use reasonable skill, care and diligence, and
- account for all monies they handle for you.
Once you have signed the listing agreement, the firm
and its agents may not give any confidential information
about you to prospective buyers or their agents without
your permission so long as they represent you. But until
you sign the listing agreement, you should avoid telling
the listing agent anything you would not want a buyer
to know.
Services and Compensation: back
to top
To help you sell your property, the listing firm and
its agents will offer to perform a number of services
for you. These may include
- helping you price your property
- advertising and marketing your property
- giving you all required property disclosure forms
for you to complete
- negotiating for you the best possible price and terms
- reviewing all written offers with you and
- otherwise promoting your interests.
For representing you and helping you sell your property,
you will pay the listing firm a sales commission or fee.
The listing agreement must state the amount or method
for determining the commission or fee and whether you
will allow the firm to share its commission with agents
representing the buyer.
You may even permit the listing firm and its agents to
represent you and a buyer at the same time. This
"dual agency relationship" is most likely to happen if
an agent with your listing firm is working as a buyer's
agent with someone who wants to purchase your property.
If this occurs and you have not already agreed to a dual
agency relationship in your listing agreement, your listing
agent will ask you to sign a separate agreement or document
permitting the agent to act as agent for both you and
the buyer.
It may be difficult for a dual agent to advance
the interests of both the buyer and seller. Nevertheless,
a dual agent must treat buyers and sellers fairly
and equally. Although the dual agent owes them
the same duties, buyers and sellers can prohibit dual
agents from divulging certain confidential information
about them to the other party.
Some firms also offer a form of dual agency called "designated
agency" where one agent in the firm represents the seller
and another agent represents the buyer. This option (when
available) may allow each "designated agent" to more fully
represent each party.
If you choose the "dual agency" option, remember that
since a dual agent's loyalty is divided between parties
with competing interests, it is especially important that
you have a clear understanding of
- what your relationship is with the dual agent and
- what the agent will be doing for you in the transaction.
When buying real estate, you may have several choices
as to how you want a real estate firm and its agents to
work with you. For example, you may want them to represent
only you (as a buyer's agent). You may be willing
for them to represent both you and the seller at the same
time (as a dual agent). Or you may agree to let
them represent only the seller (seller's agent
or subagent). Some agents will offer you a choice
of these services. Others may not.
Duties to Buyer:
If the real estate firm and its agents represent you,
they must
- promote your best interests
- be loyal to you
- follow your lawful instructions
- provide you with all material facts that could influence
your decisions
- use reasonable skill, care and diligence, and
- account for all monies they handle for you.
Once you have agreed (either orally or in writing) for
the firm and its agents to be your buyer's agent, they
may not give any confidential information about you to
sellers or their agents without your permission so long
as they represent you. But until you make this agreement
with your buyer's agent, you should avoid telling the
agent anything you would not want a seller to know.
To make sure that you and the real estate firm have a
clear understanding of what your relationship will be
and what the firm will do for you, you may want to have
a written agreement. However, some firms may be willing
to represent and assist you for a time as a buyer's agent
without a written agreement. But if you decide to make
an offer to purchase a particular property, the agent
must obtain a written agency agreement. If you do not
sign it, the agent can no longer represent and assist
you and is no longer required to keep information about
you confidential. Furthermore, if you later purchase the
property through an agent with another firm, the agent
who first showed you the property may seek compensation
from the other firm.
Be sure to read and understand any agency agreement before
you sign it.
Services and Compensation: back
to top
Whether you have a written or unwritten agreement, a
buyer's agent will perform a number of services for you.
These may include helping you
- find a suitable property
- arrange financing
- learn more about the property and
- other-wise promote your best interests.
If you have a written agency agreement, the agent
can also help you prepare and submit a written offer to
the seller.
A buyer's agent can be compensated in different
ways. For example, you can pay the agent out of your own
pocket. Or the agent may seek compensation from the seller
or listing agent first, but require you to pay if the
listing agent refuses. Whatever the case, be sure your
compensation arrangement with your buyer's agent is spelled
out in a buyer agency agreement before you make an offer
to purchase property and that you carefully read and understand
the compensation provision.
You may permit an agent or firm to represent you and
the seller at the same time. This "dual agency relationship"
is most likely to happen if you become interested in a
property listed with your buyer's agent or the agent's
firm. If this occurs and you have not already agreed to
a dual agency relationship in your (written or oral) buyer
agency agreement, your buyer's agent will ask you
to sign a separate agreement or document permitting him
or her to act as agent for both you and the seller. It
may be difficult for a dual agent to advance the interests
of both the buyer and seller. Nevertheless, a dual
agent must treat buyers and sellers fairly and equally.
Although the dual agent owes them the same duties, buyers
and sellers can prohibit dual agents from divulging
certain confidential information about them to the other
party.
Some firms also offer a form of dual agency called "designated
agency" where one agent in the firm represents the seller
and another agent represents the buyer. This option (when
available) may allow each "designated agent" to more fully
represent each party.
If you choose the "dual agency" option, remember that
since a dual agent's loyalty is divided between
parties with competing interests, it is especially important
that you have a clear understanding of
- what your relationship is with the dual agent
and
- what the agent will be doing for you in the transaction.
This can best be accomplished by putting the agreement
in writing at the earliest possible time.
Seller's Agent Working With
a Buyer back to top
If the real estate agent or firm that you contact does
not offer buyer agency or you do not want them
to act as your buyer agent, you can still work
with the firm and its agents. However, they will be acting
as the seller's agent (or "subagent"). The agent
can still help you find and purchase property and provide
many of the same services as a buyer's agent. The
agent must be fair with you and provide you with any "material
facts" (such as a leaky roof) about properties.
But remember, the agent represents the seller—not
you— and therefore must try to obtain for the seller
the best possible price and terms for the seller's property.
Furthermore, a seller's agent is required to give
the seller any information about you (even personal, financial
or confidential information) that would help the seller
in the sale of his or her property. Agents must tell you
in writing if they are sellers' agents before
you say anything that can help the seller. But until
you are sure that an agent is not a seller's agent, you
should avoid saying anything you do not want a seller
to know.
Sellers' agents are compensated by the sellers.
The acknowledgement card for this document is available
here for
you to print and sign.
